Long years ago, we made a tryst with destiny, and now the time comes when we shall redeem our pledge, not wholly or in full measure, but very substantially. At the stroke of the midnight hour when the world sleeps, India will awake to life and freedom. A moment comes which comes but rarely in history, when we step out from the old to the new. When an age ends, and when the soul of a nation long suppressed finds utterance.1
The dreams of Jawaharlal Nehru was to bring freedom and opportunity to the common man to the peasants and workers of India, to fight and end poverty and ignorance and disease; to build up a prosperous democratic and progressive nation. His detailed philosophy or welfare agenda was promoted through the Constitution of India. The model of development adopted by the Constitution of India was opposed to laissez faire state. Soon after attaining independence, we had to opt for a strategy of economic growth and development that gave the state a major and leading role. Though the choice was made out of an admiration for the Soviet model but practically there was no other alternative model available too. The government adopted a punitive state controlled model of industrial growth where the most strategic, care, and crucial areas were reserved for the public sector enterprises (P.S.Es.).
It is of course possible to argue that with independence political power passed into the hands of a section of the educated middle class, a part of which constituted the bureaucratic steel frame inherited from the British; also that this class was eminently suited to design and implement an economic plan for progress because the bourgeoisie was too weak and the landed aristocracy too backward looking to accomplish the task of modernizing the economy; also perhaps that the three classes constituted a ruling coalition under which the educated middle class served the interest of the propertied classes to secure the further of its own interests through its control over the education and administrative systems. 2
After independence, no attempt was made to restructure the economy based on pre-liberal assumptions in terms of the constitutional value system, which attempts to address the needs of developing countries. What we are witnessing today is the disastrous consequence of that failure. 3
The state - or apparatus of “government” – appears to be everywhere, regulating the conditions of our lives from birth registration to death certification. Yet, the nature of state is hard to grasp.4 The nature of Indian political and economic system has always been a mystery, because it never had an indigenous approach towards the economic and political problems of the country. Our Constitution itself is a borrowed one, though we are claiming it to be original. Chapter IV of the Indian Constitution provides welfare model for development. Article 38 directed the state to secure a social order for the promotion of welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political shall inform all the institutions of the national life. Article 38 further directed the state to make policies and strategies to minimize the inequalities of income. The question that arises is as to why this type of direction is given to the state when as Myrdal points out, “Western economists for the most part assume a conflict between economic and egalitarian reforms.5
According to western economists, inequalities in income contribute to the growth of the economy.6 Thus, the aims of the Constitution makers were quite clear. They were keen to establish a welfare state based on social and economic justice because income disparity produces range of inequalities, which pervade more than one generation in a poor family.7 The main reason for adopting the Soviet model of development with high state intervening policy was to secure the double ends of social welfare and economic development. P.C. Mahalonobis, the great visionary, in the early phases of planning, gave the development model, which strengthens the infrastructure of the country. But sooner it was found that excessive government intervention and license raj proved a stumbling block on the way of industrial development of the country. This hurdle proved detrimental. “We have failed to raise the living standards of the people to the extent required for a steady and harmonious growth. This is a failure at home. We are now looking westwards but have hopes in eastern magic as well. When the Americans, the Europeans, and Japanese come (will they come?) what will they do to our economy and to our people?8 As because we are at half way house a convenient halting place between stages of journey. Presently, India is at the crossroads either to keep moving forward or stepping backward. Such a situation is described by American dictionary as ‘halfway house’, a place where persons are aided in readjustment to society following imprisonment – etc. For describing the condition of the Indian poor, we have to accept the American version of a halfway house, but with some modification. Our poor have always been in prison; they are aided not for readjustment but for adjusted survival. The adjustment are being made by the bosses, as the American says, at the top.9
The introduction of new economic policy in India led to a new thinking on the role of the state where welfare is a pre-existing, sufficiently well defined and identified concern and deep-rooted constitutional commitment.10 The question, which causes much of concern, is that can India come out of the commitment made under Article 38 to the people of India? Can state transform the welfare economy into market friendly paradigm? “The Constitution was to fasten the achievement of many goals, transcendent among them was that of social revolution. Through this revolution would be fulfilled the basic needs of the common man, and, it was hoped, this revolution would bring about fundamental changes in the structure of Indian society – a society with a long and glorious cultural tradition, but greatly in need.”11 It is feared that the “sovereignty” and “socialistic” texture of our society, which are the basic features of our Constitution, are emerging as challenges under the new economic policy.12 The transition to market economy gathered pace all over the world. Almost all the states drifting away from the age-old model of state controlled economic development. The entrance of World Trade Organization (WTO), Multinational Corporations (MNC’S), International Monetary Fund (IMF) etc on the world scenario brought about change all over the world. The present globalization of economies has resulted from the progress and transfer of technology; spread of communications etc. The New International Economic Policy has been implemented in India since 1991. This policy in fact should be addressed as ‘NIEP’ because it was given birth by the neo Imperialists, to further the cause of exploitation by neo colonial powers. India devalued the currency, and made it partially convertible so as to adjust to the changed scenario.
The rationale behind economic liberalization is that India cannot go on depending on the bounty of multilateral institutions or on commercial borrowings. Indian industry must, instead, build up export capabilities of the sort not possible in an economy tied up in regulatory knots fettered by red tape and locked out of the world by a cocoon of protectionist policies.13
Drift from Constitutional Commitment to Market Friendly regime
No one knows what he can do until he tries. And so, India adopted new economic policy. 1991 was the correct time to switch over to something innovative because government stood discredited and was going out of fashion. Dr. Stiglitz points out, “Much of the role of government can be viewed as establishing infrastructure in its broadest sense – the technological, educational, financial, environmental, and social infrastructure of economy.” Ability is a poor man’s wealth. The winds and waves are always on the side of the ablest navigators. India lacked able navigators. With the passage of time, the dark psyche of New Economic Policy (NEP) is being exposed. This NEP comes up with new strategy and action plan. NEP was founded on two pillars of globalization and privatization. Economic plans are neither a matter of policies, nor can economic efficiency be an automatic product of the right economic policies. If India has to forge ahead, the power of vested interests and the resultant corruption in every field – including education – must be curbed.14 The environment of India not being friendly for NEP, the result was quite clear. In the name of Globalization and Privatization, the big economic giants such as G-7 countries, through neo-colonialism, made developing countries their targets as neo-colonies. Down below we shall examine the stark and startling features of New Economic Policy. Besides we shall also examine certain intriguing foreign elements born out of NEP, which strike in the form of Globalization, Privatization, Foreign Direct Investment (FDI), Disinvestments of Public Sector Enterprises (PSEs) etc.
Globalization broadly speaking means “integration of economies and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance and people. The essence of globalization is connectivity.”15 This laudable concept originally intended to sub-serve a more just and equitable world order. The implementation of NEP in India was also on the same note. But this very concept on the one hand, destroyed the traditional web of Indian economy, and on the other hand, it is unable to fulfill the very promise it made at its inception. Increasing export – orientation of national economies, the dismantling of tariff barriers to imports, the linking of national currency to International markets, the privatization of nationally owned assets etc. lead to serve contraction of public expenditure.16
The gains and losses from globalization can be analyzed in the content of the three types of channels of economic globalization.
(a) Trade in goods and services
(b) Movement of capital and
(c) Flow of finance 17
Rapid development of capital market and expansion in foreign exchange market are the important features of globalization. In the last decade, what the experts analyzed is of great concern. According to them poverty ratio had decreased considerably in last decade. Quality products with consumer friendly rates are available in the market. Therefore, opting out of globalization is not a viable choice at all. “Through the Bretton Woods Conference (1944) marked the beginning of a New World Trade Order which triggered economic changes based upon a paradigm shift implicit in the draft crafted by Arthur Dwnkel, eventuating in the Uruguay Round and the Final Act. One of the major objectives of this Dwnkel Draft Text was the creation of a new world wide market grab system – the hidden agenda – highlighted by the Orwell Ian Double speak: “globalization” “liberalization” and “privatization”. The thrust of course, was the capture of world markets by the International Corporate Power incarnate, under the hegemony of American Incorporated.18 We are going ahead towards Globalization without realizing the very effect of it on Indian economy. Though we are not in a position to go back but certainly, we have to control the implication of Globalization according to our norms and means. On the contrary, WTO, IMF and other great economic giants are controlling not only the economic policies of India but they are also influencing the political decisions of Indian political system. Our foreign economic policy is being directed by the WTO regulations, which are binding on us. In the words of honorable justice V. R. Krishna Iyer, “Globalization is the latest game of corporate cannibal trying to occupy the economic space of the third world, a déjà vu of the old East India Company but with exponential potential aided and abetted by fifth columnist enterprises. The world is one. It is united by market hungry multinational corporations of the first world monopolizing the resources of third world, with the single Global objective of maximum profits and dismantling national private pigmies and public sector industries.” 19
Another important concept and phenomenon which is continuously influencing the Indian Economic System is Privatization. Adam Smith was the first to adduce economic reasons to justify privatization. He observed: “no two character seem more inconsistent than those of trader and sovereign.20 In the words of S. R. Maheshwari,21 “Privatization is the transfer of control of ownership from the public to private sector, such a transfer being necessarily associated with market liberalization and deregulation, changing the macro economic context, the competitive environment and the labor market of the country. It refers to “full conversion of property rights from the state of collective owners to private owners.” Privatization is an emotionally charged term in countries like India and is viewed as an ideologically and politically explosive issue.22 In the words of Samir Amin23 Globalization and Imperialism is nothing new. The history of capitalism since the very beginning has been the history of imperialist expansion. And the system was always global – globalization has always been imperialist globalization. It has never been achieved by peaceful and equal negotiations between peoples. Over this, Rightist has their own view. According to them “change is always for better and happens spontaneously Change is always painful, but it is always transitional. The market, that is capitalism, will itself solve the problem in the long run when everybody is dead.” It is not ideology but propaganda. G-7, W. H. O., I. M. F., World Bank is not global organizations but organization of Global North.24
Privatization is the backbone of globalization. In India privatization of crucial and core industries had already taken place. Blind privatization of each and every industry is not the proper solution for hanging Indian economy. Innovative solutions are needed to solve this problem. Indeed, evidence from all over the world is accumulating to declare that the private sector has failed miserably in urban water supply. Yet, the Asian Development Bank (ADB), the World Bank and the WTO /GATT’S continue to push this policy exhibiting an ostrich – like attitude to the realities.25 There is no doubt that public systems failed miserably in providing efficient water services to the poorer sections of society because of lacking managerial skills, inefficient, corrupt and ineffective officials. Yet, this is not the correct cause to privatize water industry. According to Hon’ble justice V.R.Krishna Iyer, “It is unconstitutional, unethical and violative of Human Rights to sell or negotiate disposal of publicity owned water resources for mineral water rackets by industrial giants. The locus classic us on this point is blazed in M. C. Mehta v/s Kamal Nath. “The notion that public has a right to expect certain lands and natural areas to retain their natural characteristics is finding its way into the laws of the land. The ancient Roman Empire developed a legal theory known as the ‘Doctrine of Public Trust’. The Public Trust Doctrine primarily rests on the principle that certain resources like air, sea, waters and the forests have such a great importance to the people as a whole that it would be wholly unjustified to make them a subject of private ownership. The said resources being a gift of nature, they should be made freely available to every one irrespective of the status on life.” The Pamba of the Malampuzha (the Ganga or the Narmada) belong to the people and the state cannot abandon its fiduciary obligation. It is unconstitutional, unethical and violative of human rights to sell or negotiate disposal of publicly owned water resources for mineral water rackets by industrial giants.26 Unfortunately, the liberalization ideology has become a synonym with privatization of not only the economy as a whole but also of marketisation of governmental functions and public services thus, resulting in creation of a ‘ police state’ which is against the ethos of a welfare state.27 Surprisingly entire world is converted into a big market.
Disinvestments & Foreign Direct Investments
Disinvestment of public sector units (P. S. U’s) was the next step taken by the Indian economic and political policy makers. Disinvestments of government’s equity in P.S.U’s opened closed areas for private participation. The government on March 8, 2002 opened the gates for more private sector companies, to market petrol and diesel across the country. This led to the end of exclusive rights of HPCL, IOC, IBP and BPCL in market transportation fuels. The Effluvia of globalization can be clearly felt now. The end of small-scale industries led to the downfall of number of indigenous industrialists. Now even cooperative societies have to face the siren of Multinational Companies. India is showing the clear signs of egress from welfare model. The present global village has forced even the European countries to form a union to survive; while we are trying our best to destroy the beautiful well knit country into bits and pieces, as if the previous invaders had not done enough to damage the Indian culture.28
After the disinvestments of public sector units and privatization of number of firms such as Delhi Vidhyut Board (DVB), Mahanagar Telephone Nigam Ltd. (MTNL) etc; now foreign direct investment (FDI) is the another step towards the process of globalization.29 Government on March 7,2002 permitted 100% foreign direct investment (FDI) in the automobile policy. In view of the highly competitive automobile industry in India, the new policy does not prescribe any minimum investment norms. Foreign direct investment in the country by M. N. C’s and non-resident Indians (NRIs), public disinvestments policy undertaken by the Union government and several state governments etc., have forced the state to withdraw not only from the economic sphere but also from the social field.30
Indian agriculture in Market Friendly Regime
India is an Agricultural country. India’s main source of income is agriculture. Being a member of W. T. O. and under the influence of Globalization, India adopted the provisions of the Agreement on Agriculture (AOA). The ‘Human Development in South Asia 2002: Agriculture & Rural Development report’ reveals that the real challenge before the region is to build a system of agriculture and rural development that is both growth oriented and human centered. As per Mahbub-ul-haq, compiler of report, human development and economy are linked with each other intrinsically.31 Human development can only be achieved through the equitable distribution of the benefits of economic growth among the people.32 Human development report 2002 draws a few logical conclusions:33
In Kerala, the A. K. Antony government set up a commission on W. T. O concern in Agriculture in 2001. Primary aim of this commission is to search new opportunities out of WTO regulated trading system, which is “inherently asymmetric in its impact. The experience of the last eight years has shown that the WTO. has no visible agenda for resource poor farming families-----. It is clear that the AOA needs to be redesigned on a pro-poor, pro-small farmer, pro-livelihoods and pro-environment framework.”34 Commission has made 19 specific recommendations for Kerala. To promote Trade and Intellectual Property Rights literacy is one of the most important recommendations made by the commission. Agriculture is proving to be the principal bottleneck for those within and outside the World Trade Organization (WTO) trying to push through a new international trade agreement.35 The Cairns group of exporting countries (Argentina, Australia, Bolivia, Brazil, Canada, Chile, Columbia, Costa-Rica, Guatemala, Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand, Uruguay) has proposed an efficient agenda of liberalization in the agricultural area. Through “Swiss Formula”, they proposed to reduce Tariffs sharply. According to ‘Swiss Formula’ the larger the proportionate reduction in the tariff rate, the higher is the bound or applied tariff in a country.36 Now the problem, which crop is that under the WTO regime there is no scope for welfare of the farmers. WTO. is strictly Business oriented Organization. An immediate result of this type of International Rural Politics is that close to half of rural families have gained very little from the process of planned development all the rhetoric about the commitment of the state and polity to the cause of the poor.
High levels of human development cannot be achieved, if, development priorities do not focus on the occupation of the majority of the people, that is, farm and non-farm employment, and where they live that is, rural areas.
The focus of the policies for food security is on the “welfare” of the people instead of their “empowerment”. The availability of and access to food must have close association with the people’s purchasing power.
The region’s agriculture is facing cultivable land constraints and the negative consequences of over-dependence on chemical inputs; future agriculture productivity increases must come from an advancement of agricultural research, technology and extension services.
Small farms should be the center of the revival of agriculture and rural development. The incentive system that is being offered to corporate farming in South Asia should not be at the expense of the vast majority of the rural populace.
South Asian Agriculture marketing and trading systems have not been effective and efficient owing to both internal constraints and an inequitable external trading environment.
Indian agriculture is suffering the most under these WTO regulations because our emphasis is on the industrial sector. But the ground reality is that India is much suited for the agricultural reforms. The cut is farm subsidies are surely going to affect the farmers. Now the problem is that India actually adopts these policies under the pressure of WTO. The era of giving subsidies of benefits to the individuals is over. The WTO regulations have wiggled the traditional web of Indian welfare model. Therefore, the development of infrastructure is the first important step, which should be taken by the Indian policy makers.
Social Justice, Human Rights Vs. Market Friendly Economic Policy
Human Rights are more than legal concepts: they are the essence of the man. They are what make man human… Deny them and you deny man’s humanity.37 A decade back, we have a different traditional concept of human rights. There we have violations of human rights by the Police persons, Military officials, and Terrorists etc. Now with these traditional violators of human rights, we have certain other deadliest partners too. The advent of Globalization and privatization add certain intriguing causes, which are violating human rights quite consistently in developing countries under the umbrella of WTO. Within the past few years, the world has witnessed numerous changes. The major change was the upcoming of MNC’S and Trans-National Corporations at the upfront.
The term ‘health’ signifies more than absence of sickness.38 In the words of Steinbeck39 the fields were fruitful, starving men moved on the roads. The granaries were full and the children of the poor grew up rachitic, and the pustules of pellagra swelled on their side. The great companies did not know that the line between hunger and anger is a thin line. Life in good health and free from disease is the foremost human right. Supreme Court40 in a case observed that the right to health is an integral facet of meaningful right to life, to have not only a meaningful existence but also robust health and vigor without which worker would live life of misery; lack of health denudes livelihood. Health is the very basic of development. Due to the advent of MNC’S the rich is becoming richer and the poor is becoming poorer. The right to health is hampered by the TRIPs. Multinational Corporations (MNC’S) having no soul and working strictly on the one ground of accumulating capital have no concern for the health of the masses. Environmental pollution, ecological destruction, human rights violations, etc. have no concern for the MNC’S. Monopolies are market-friendly and morality-deadly. When a few corporations control the access to markets, there is very little to prevent them from manipulating the market to maximize profits, forcing prices down to buy up the commodity cheap from producers and then pushing them up so as to unload at a nice profit.41 The ‘Humanistic jurisprudence’, has nothing to do in a corporate society. Our Republic, with an ancient composite culture and modern socialist texture, suffered a value torture in the 90s of the 20th century. Socialism slumbered in the constitution; secularism slowly lost its vigor and re-colonization ‘red in tooth and claw’ pressured the mughals in Delhi to abandon the marvelous values of humanism and compassion and substitute them with globalization, liberalization, privatization and marketisation.42
The constitution of India made India an egalitarian country. We consider an existing income distribution relatively egalitarian when the differences between the highest and lowest incomes are relatively small. To restructure the social order of India by giving egalitarian direction is to fulfill the spiritual mission of Marx and Mahatma. In the words of Mahatma Gandhi,” Working for economic equality means abolishing the eternal conflict between capital and labor. It means the leveling down of the few rich in shoes hands is concentrated the bulk of the nation’s wealth on the one hand, and the leveling up of the semi-starved, naked millions on the other. A non-violent system of government is clearly impossibility so long as the wide gulf between the rich and the hungry millions persists. The contrast between the palaces of New Delhi and the miserable hovels of the poor laboring class nearby cannot last one day in a free India in which the poor will enjoy the same power as the richest in the land. A violent revolution and bloody revolution is a certainty one day, unless there is a voluntary abdication of riches and the power that riches give and sharing them for the common good.43 Social Justice has an intrinsic value and a missionary message for the developing country like India. The Constitution was to foster the achievement of many goals; transcendent among them was that of social revolution. Through this revolution fulfilled the basic needs of the common man, and, it was hoped, this revolution would bring about fundamental changes in the structure of Indian society- a society with a long and glorious cultural tradition, but greatly in need, Assembly members believed, of a powerful infusion of energy and nationalism. The theme of social revolution runs throughout the proceedings and documents of the Assembly.44 The ultimate thing is that we have to go with the WTO, if we have to survive in this global world. Below we will see how can we sustain ourselves.
India under Globalization. Is there any Future?
Do not find fault find remedy. There are at present 142 members in the WTO. what is needed is to evolve an appropriate framework to wrest maximum benefits out of international trade and investment. This framework should include (a) making explicit the list of demands that India would like to make on the multilateral trade system, (b) measures that rich countries should be required to undertake to enable developing countries to gain more from international trade, and (c) steps that India should take to realize the full potential from globalization.45
To get the fruits of globalization is not a tough task at all. We have to maintain a healthy environment in which both (MNC’S and local companies) will survive in a proper way. The only requirement is to build a state of the art infrastructure. WTO has given ample time to the developing countries to comply with the requirements of the WTO regulations. Though India to an extent fulfilled the requirements of WTO still a lot is required to do. In the words of Justice V.R.Krishna Iyer,” the deeper diagnosis of the sinister syndrome of dastardly contradictions is easy and uneasy.’ Boneless wonders’ in political office, under pressure from the North, are in power as proxies of the MNC.- IMF. - World Bank Axis! Swadeshi is dead, Socialism is bete noire, the Barabasque Order is in Command and Jesus is on the Cross? The middle class, under the circean spell of foreign life style, is collaborating in this echelons are tending to be MNC. limpets. Courts are casinos, dockets are log-jammed and litigation is pauperization. Where is hope?”46 Therefore, the problem is not without but within. The flexible and boneless politicians of India are only involved in the game of coalition politics.
The Indian economy is going on target. Though the profound psychology of the public is against the phenomenon of globalization as such. The reason may be the very fact that media is reluctant to accept the ever increasing globalization. Journalists are often mere messengers of news and views to brainwash the public and fail to convey the great message needed for the people. Will our rulers trade our freedom in the guise of free Trade? The time to protest is late. Mark Twain holds good for the Indian intelligentsia: It is by the goodness of the God that in our country we have those three unspeakably precious things: freedom of speech, freedom of conscience, and the prudence never to practice either of them. (Oxford quotations P: 554-557)47
The entrance of globalization in India proved good for us. Now even Indian companies become conscious of the fact that they have to not only manufacture the quality products but also have to control the prices of the products too. This proves beneficial for the consumers because they are getting superior goods at the cheaper price. Truly, “thoughts are things,” and powerful things at that, when they are mixed with definiteness of purpose, persistence, and a burning desire for their translation into material desires. Opportunity has a sly habit of slipping in by the back door, and often it comes disguised in the form of misfortune, or temporary defeat. Perhaps this must be the reason why India fails to capitalize the opportunity of developing one self.
India must use all its sources to utilize the resources we have. Infrastructure must be modernized with immediate effect. A committee will be organize with the scholars and professionals to look after the reforms require in the infrastructure of the country. With the help of organized planning we can crystallized our desire of a strongest economy of the world. Success requires no explanations and a failure permits no alibis. Now we are living in the global world and we have to develop ourselves so as to compete with the world economy.
India now being the member of number of International Conventions and Treaties is in a better position to utilize the benefits of transfer of technologies. Development is human right, not an elite luxury.48 There is no achievement without preparation. India should prepare herself for the globalization. There is no other way out. Global finance, which is highly mobile, does not move with the purpose of “development” but on the strength of “conditionalities”. We have to use this highly mobile money according to our own norms. The adoption of NEP was a good step towards development. But unless the public sector moves out of the control of politicians and bureaucracy sitting on the revolving chairs, with short tenures and hence little commitment to the enterprise there is no hope for an improved performance from the public sector.49 We can utilize the benefits of this buzzword globalization only when a state regulated Market Economy will come forward. Retreat of the state is not the ideal condition infact this thin line between the liberalization and the state must be broadened so as to put India in to the driver seat of the World Economy. Organized planning is the need of the hour. Definiteness of purpose is the starting point of all achievement.50 Indian Economy is no more bounded in red tapism as such; it also opened its feathers to touch the limits of the sky.
Now we have to think positive and made our infrastructure capable enough and flexible to the extent so that we can accommodate foreign giants in India too but on our norms and regulations. We have to apply the real meaning of the term “development”. The concept of justice as fairness must be seen in a broader perspective. Where on the one hand the social and economic justice required perspective reorientation, on the other hand implementation of the Liberalization needs total commitment from the citizens of India as a whole.